Daily Timeframe: The daily demand area seen at 117.225-117.873 has now been well and truly consumed, which as a result forced the market south towards the aforementioned major weekly swap level. In the event further buying is seen from here, we can likely expect the market to test a daily supply area coming in at 119.196-118.041.
4hr Timeframe: It was mentioned in the previous analysis that we set a pending buy order at 116.844, just above a 4hr demand area at 116.326-116.784, as we expected price to bounce here. How wrong we were! The market consumed this area, and continued dropping towards a 4hr demand area seen at 115.444-116.087, which conveniently sits on top of the aforementioned major weekly swap level. For the time being, the USD/JPY pair is (in our view) capped between this 4hr demand area, and a small 4hr swap zone above coming in at 117.432-117.804.
In the event a breakout north is seen, price will immediately be trading around 118. This level may repel the market, and could in its own right be a tradable short, but considering we are seeing higher-timeframe buying at the moment – best to avoid selling there. On the other hand, a break lower could force price to test a partially consumed 4hr demand area coming in at 114.624-115.005 where a bounce could be seen. However, lurking just below here is an even more attractive area of demand – a 4hr Quasimodo (113.847-114.252). The reason being is simply because this area is located just above a major weekly swap level seen at 113.710 making this a nice area to look for future longs.
At this point in time, we have no intention of trading between the capped limits; we would rather wait and let price action unfold, and trade once the market shows more promising direction.
Current buy/sell levels:
• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).